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Use the amount, period and recipients together
Under the stated federal exemption, aggregate required payments or commitments to the franchisor or an affiliate from before operations begin through six months after they commence. The total must be less than $735; exactly $735 is not less. Older material quoting $500 does not give the current amount for this exemption.
Required means the rule’s actual definition, including contractual or practically necessary payments and its exclusions. A commitment can matter before cash is collected.
Fictional example: $300 is not the whole price
A brand requires a $300 initial fee, $250 training payment and $250 software commitment to its affiliate within the relevant period. Assuming all three are required payments under the rule, $300 + $250 + $250 = $800. The amount condition is not met on those assumptions.
Collecting the software money later does not establish that the obligation was undertaken later. Check the commitment as well as the payment date; an unknown required amount is not zero.
The inventory exclusion is specific
The payment definition excludes reasonable quantities of inventory bought at bona fide wholesale prices for resale or lease. It does not exclude every supply purchase. Equipment or materials consumed in providing a service are not automatically inventory for resale.
This is an exemption from specified federal disclosure duties, not the franchise definition or an exemption from state franchise, business-opportunity, dealer, advertising or relationship law.
Scope
- The page establishes no actual exemption or approved payment structure; the full definition and transaction facts still matter.
Next step
Count required commitments, their recipients and timing before relying on the low-payment exemption.
Sources & review notes
Federal Trade Commission
Passage, dates and research notes
primary · section-436.8
less than $735
Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.
Federal Trade Commission
Passage, dates and research notes
primary · section-436.1
whatever it may be called
Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.
Federal Trade Commission
Passage, dates and research notes
primary · section-436.10
equal or greater protection
Current eCFR displayed through 2026-11-09; eCFR is authoritative but not the official legal edition.
Detailed rule records (1)
Under 16 CFR 436.8(a)(1), aggregate required payments or commitments to the franchisor or an affiliate from before through six months after commencing operation must be less than $735 for this federal exemption. This is not a universal definition threshold or a state exemption.
16 CFR §436.8: Federal franchise exemptions 16 CFR §436.1: Federal franchise definitionKeep this reading in your learning library.
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